authority, a practice that extends back 30 years and allows congress to set out negotiating objectives while ensuring that final agreements will receive an up or down vote. finally, all these policies are part of an overall fiscally responsible framework. our deficit has come down sharply in the short run. the longme down in run. our debt will be declining as a share of the economy for the next several years. after 2018, that that will start rising as a share of the economy, which is why we will be putting forward a more balanced measures on both revenue and the expenditure side to ensure that tot debt is continuing decline. >> later in our program schedule, we will take you live to the u.s. house. mr. speaker. the speaker pro tempore: mr. secretary.

the secretary: i am directed by the president of the united states to deliver to the house of representatives a message in writing. the speaker pro tempore: pursuant to the order of the house of january 7, 2014, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour ebate. the chair will alternate recognition between the parties with each party limited to one hour and each member other than the majority and minority leaders and the minority whip , but in o five minutes no event shall debate continue beyond 1:50 p.m. the chair recognizes the gentlelady from north carolina, ms. foxx, for five minutes. thank you, mr. speaker. mr. speaker, i rise today to talk about h.r. 899, the

unfunded mandates information and transparency act, which will be considered by the house later this week. i realize, mr. speaker, that this name doesn't come trippingly off the tongue, but it is an important piece of legislation. every year federal agencies impose thousands of regulatory mandates on local governments and small businesses. those mandates are often costly, stretching city and state budgets and making it harder for businesses in north carolina and around the country to grow and add jobs. one will force washington to think about regulatory costs before pass em-- passing them onto small businesses. this will make sure when it is enacted when benefits gleamed by the rule outweigh the costs imposed by the rule. ultimately this bill is about

transparency and accountability, something democrats and republicans can support with equal federal reserver. mr. speaker, i -- fervor. mr. speaker, i began writing this legislation in 2011. knowing it -- in 2007. i sat down with my staff to think about legislative ideas -- could gain sufficient bipartisan support to make it enacted. we started looking at the reform act of 1995 which cleared a republican congress before being signed by president clinton. -- umra was part of bipartisan legislating so we looked to it for ideas. the guiding principles of it was that the american people would be better served by a government that regulates only on the basis of good are information, including a

cost-benefit analysis. it was a good bill, but over time shortcomings have become apparent. multiple administrations over the past 19 years have attempted to fix loopholes via executive actions. additionally, independent regulatory agencies have become far more prevalent in the intervening years, so it's very important to make sure they're bound by the same transparency requirements as other regulatory bodies. to address these issues, we drafted the unfunded mandates, information and transparency act. it will codify these executive fixes and fix some currently unaddressed loopholes to make sure that federal agencies are in compliance with the spirit of umra. mr. speaker, like umra, umita is bipartisan legislation. three out of four co-sponsors are democrats. this bill has gained bipartisan support because it is purely about good goode government, fostering about the cost of

regulations. specifically, umitra will require government's independent regulatory agencies to analyze the costs of their proposed mandates before they're imposed on the public, treat changes to conditions of grant aid as mandates, guarantee the public always has the opportunity to weigh in on regulations and equip congress and the american people are better tools to determine the true costs of regulations. finally, h.r. 899 will ensure government is held accountable for following these rules. if the requirements set forth by umra and umita are not met, a judicial stay may be placed upon these regulations. accountable federal agencies damaging our economy with poorly considered regulations, this will help with that. i look forward with broad support from all my colleagues when it is considered on friday. i yield back. the speaker pro tempore: the chair recognizes the gentleman

from alabama, mr. brooks, for five minutes. last week the tennessee valley of north alabama enjoyed a great economic victory when remington outdoor company announced 2,000 new jobs and a new firearms manufacturing plant in the valley. last month new york governor andrew cuomo declared that hardworking americans who believe in the second amendment's right to bear arms have no place in the state of new york because that's not who new yorkers are, end quote. no question, alabama and the tennessee valley owe a debt of gratitude to new york and it's governor cuomo for helping to inspire remington to expand in beafment but to be fair, new york's hostility to the second amendment is only one factor supporting remington's alabama expansion. the most important thing is that alabama is better place to do business.

new york's income tax rates are roughly 60% higher than alabama's which means that alabama's hardworking citizens keep more of the money they earn. new york's per capita property tax rates are roughly four times higher than those in alabama which means that huntsville metro citizens are twice as likely to own a home than new yorkers. new york's tax burden is 50th worse in america while alabama is a respectable 21st. new york residents are 25% more kely to live in poverty than alabama's huntsville residents. the overall fiscal condition is 10th best. new york's financial condition is near the bottom, ranking 45th in each category. alabama's financial future is bright. new york increasingly risks being unable to pay for basic services. new york workers average commuting 78 minutes a day to and from work versus 35 minutes

a day for huntsville citizens. they have more time to spend with their families and the enjoyment of life. and alabama, the cost of living is 11% below the national average. in new york, the cost of living is 25% above the national average. a paycheck in alabama buys 40% more than the same pay cleck in new york. new york's right to work law means that alabamians cannot be forced to join a union against their will. whether it be our right to work law or the second amendment right to bear arms, alabama's motto says it all, we dare defend our rights. but beating out new york was only half the battle for remington's new plant. alabama faced stiff competition from 24 other states. yet, in the judgment of remington, the tennessee valley was the best place to live, work and grow their business. why? the tennessee valley is highly educated. for example, huntsville metro s the highest per capita

engineers in america. they are ranked number seven in america by cnn money as, quote, a great place to live and find a job. number four in america by the progressive policy institute on the list of america's high tech hot spots. in the top 10 by "usa today" as a great place to be inspired by innovation. number three in america by business facilities for aerospace and defense manufacturing and in the top 10 in america by families circle magazine for being a great place to raise a family. the tennessee valley is blessed with a clean environment and four major lakes with world renowned fishing and water sports, lakes that stretch the entire length of the tennessee valley unlike new york and other blue states, in alabama, envy, greed and class warfare are not political weapons that justify attacking, taxing and destroying success. to the contrary, in alabama we applaud those who, through hard

work, find prosperity and the american dream. in alabama, we are blessed with a great governor in robert bentley. we are blessed with political leaders in jackson, marshall, madison, limestone, morgan, lawrence, colbert and lauderdale county who support free enterprise and who are cooperative and willing to help each other achieve success, attributes that included that the tennessee valley was the best place in america for remington to greend prosper. thanks to remington, americans will soon be able to exercise their second amendment rights by buying and owing firearms made in the great state of alabama. thank you, remington. and as for all you other businesses in blue states who are tired of being attacked and regulated and tax understood submission and financial loss, come on down. there is a reason why remington chose alabama and a reason why we are called alabama, the beautiful. try alabama. i promise you will like it and wonder why you didn't come

sooner. mr. speaker, i yield back. the speaker pro tempore: the chair recognizes the gentleman from california, mr. denham, for five minutes. thank you, mr. speaker. mr. speaker, i rise today to acknowledge and honor the life of a true american hero, robert newton lowry, on his 95th birthday. bob was born on this day, february 25, 1919, 95 years ago here in washington, d.c., but he considers modesto, california, as home. for high school, mr. lowry attended a military school in upstate new york. he graduated at the top of his class and was named an rotc honor grad. he received a commission to the united states army but unfortunately he was too young to accept it at the time. he then was admitted to princeton university. during his time there he received the prestigious new york herald book award. he graduated in 1942 with highest honors and rotc. these earned him another commission. this time to the united states

marine corps. as a second lieutenant, in july, 1942, following officer candidate school at quantico, he began artillery training. on february of 1943, bob sailed out of san diego harbor with he second about a tailon, 12th regimen. and he fought in the south pacific, then the original invasions in guam andy woe jeema. during his time in auckland, new zealand, he met his wife and married in may of 1946. mary died in april, 2005, just two weeks before their 60th anniversary. mary always maintained as lieutenant commander, she outranked him both in the military service and in their marriage. thur' survived by two -- they're survived by two children as well as four grandchildren sam and joe and michael. after the battle of iwo jima, he returned stateside where he

commanded a marine guard company to the naval station. he was soon appointed commanding officer of the uropa sent to europe to provide security for a seized german luxury liner. bob was one of the few marine corps officers to manage the commissioning of this kind of naval vessel. he was released from active duty in january of 1946 and retired in 1959 with the rank of major. following his time in the marines, he enrolled in law school at the university of virginia and then postwar accelerated program graduating in 1948. he then began a lifetime of specialty law practice, primarily in public utility and transportation. his career started with the southern railroad and then progressed to his work at a law firm in washington, d.c. in 1953 he accepted a position, a renowned law firm in san francisco, from which he retired in 1989. he's greatly enjoyed the company of the marine corps

league. the modesto attachment, whose members go out of their way to include him to celebrate his service as well as their doing this 95th birthday celebration. mr. speaker, please join me in honoring robert newton lowry on his unwaivering dedication and contributions to this great nation. i yield back. the speaker pro tempore: the chair recognizes the gentlelady from illinois, ms. kelly, for five minutes. thank you, mr. speaker. as we have served the final week of black history month, i'd like to recognize the divine nine historically black from a territories and sororities. for over 100 years, brothers and sisters of the divine nine have played an instrumental role in altering the course of american history and the divine nine have served as training grounds for some of our nation's best and brightest leaders.

the divine nine organizations are alpha phi alpha fraternity, founded in 1906 at cornell university. their brotherhood includes the reverend dr. martin luther king jr., congressman emanuel cleaver, danny davis, al green, gregory meeks, charles rangel, david scott and bobby scott, ambassador andrew jackson young, the national urban league president, legal pioneers charles hamilton houston and thurgood marshall and their honorable president, mark s. tillman. alpha alpha kappa sorority founded and boasts congresswoman sheila jackson ee, felicia rashard of the "cosby show," core receipta scott king and their attorney,

carolyn stewart. kappa fallal if a kappa, among their notable achievers are michael, c.e.o., john w. thompson, civil rights leader, abernathy, founding members of the black caucus. congressman sanford bishop, william lacy clay, john conyers, alcee hastings, benny thompson and hakeem jeffrey and wendy -- william randy bates. . omega sci-fi at howard university. they include asusstant house democratic leader james clyburn of south carolina, congressman hank johnson of georgia. nasa administrator charles bolden. comedian bill cosby. dr. charles drew whose medical research in the field of blood transfusions led to the founding

of the blood bank and dr. andrew ray. delta sigma theta, founded in 1913 at howard university. delta count as sisters my esteemed colleague and chairwoman of the congressional black caucus, the honorable marcia l. funnel, also congresswomanny vet clarke and joyce beebe. shirley chiss who em, -- chisholm, and paullet c. walker. phi beta sigma fraternity, founded in 1914 at howard university. not only are the sigmas of the fraternity of my husband, dr. nathaniel horn, they also include former president of the united states, william jefferson clinton, congressman john lewis, a. phillip randolph, civil rights pioneer and leader of the brotherhood of sleeping car porters. dr. george washington carver, and their honorable president, jonathan mason.

theta phi fatea soar report founded in 1920 at howard university. notal sisters include jazz great sara vaughn, the late congresswoman julia carson, and their honorable president, mary wright. sigma gamma roe, my sorority founded in 1922 at butler university. the sisters include congresswoman corrine brown of florida and the late congresswoman lindy boggs. the first african-american winner of an academy reward, hattie mcdaniel, and esteemed im. de, juanita harl the notables include congressman of rush, former alderman chicago's 26th ward, and their polaris robert

clark. whether it's standing up for women's suffrage, dismantling jim crow, advancing the science of medicine or leading in business innovation, the divine nine has been there the entire time leading from the front. the divine nine scope of service is felt far beyond their organizational borders. the work of these fraternities and so roarities have helped to make this nation a better place for all americans. for this and many other reasons, i thank the entire divine nine for a job well-done. testimony the speaker pro tempore: pursuant to clause 12-a of rule 1, the chair declares the house in r

it's that cycle of infusion and where it's at in the process. >> this weekend book tv and american history tv look behind the history and literary life of salem, oregon, saturday at noon on c-span2, and sunday at 2:00 n c-span3. former federal reserve chairman alan greenspan says the u.s. is making a mistake with its current immigration system.

mr. greenspan's comments came during remarks at the national association for business economics conference. the former fed chair discussed -- discusses the ongoing economic recovery. the dodd-frank financial loan, and income inequality. >> good morning, everybody. i'm here with man who needs no introduction. a little bit about what he thinks, current economic conditions, some of the challenges we are facing in terms of the overall recovery, and then get into some of the policy recommendations that dr. greenspan thinks are necessary to solve this stagnant recovery we are in right now. so, dr. greenspan, let's start with a very generic type question, what's your current view on the u.s. economic outlook? >> i would say essentially more

of the same. that if it weren't for the fact that asset prices were probably still undervalued in part, i think we would be in a much more difficult series of problems. any of which, larry went over. we are still in the position where the equity premium on stocks, for example, reached a 50-year high just several years ago, and they have come down only partway -- part way. remember that stock prices over 67% ears have risen by annually, fairly consistently, with about half being real, half being inflation. and we have had no change for a number of years, which means that granted the market was high

n 2007, but we have five years of fundamentally no change. so that there is a slight set of pressures, that's probably the only thing i can talk about on the economy. >> what about there's been a debate whether or not the -- over the past couple months we have seen economic data turn a bit slower, and a lot of it is being attributed to weather. do you believe that? >> i think certainly part of it is. a very significant downward revision of the fourth quarter g.d.p., and we are seeing a definite slowing down -- one of the problems being, very large accumulate of g.d.p., and the rate of increase is now slowing, which of course brings the level

of g.d.p. down. and we are definitely seeing some slippage in industrial production. weekly to weekly the industrial production index. has come down a bit partly the result of weather. we are also seeing that carloadings adjusted to the waits of the index have also started to go lower. i don't think that's anything really fundamental. i think it is essentially a reaction to the excess inventory accumulation and the mistaken buoyancy that occurred in the second half of last year. but it's basically, as far as i can see, this first quarter looks like 2%. it may go up a little bit the rest of the year. that still remains to be seen. the standard models are those extraordinarily complex and very

sophisticated structures which did so terribly well september 15, 2008, i was shocked myself because i was a great fan of the federal reserve's system and we missed it, j.p. morgan missed , oecd mittsed -- missed it, i'm hard pressed to find anybody with a hard structure model that got it right. i just finished writing a book saying what in the world went wrong? that is not the title of the book. >> looking now, looking more simpler, equity markets have done fairly well over the past year a bit more. are they getting ahead of themselves? is there any possibility of a bubble there? >> the issue of bubble is, no. but that's not the same thing as

saying that it can continue higher. bubble requires a degree of euphoria which is not quite in the marketplace. so that, yes, the market could go lower because of what i would differ with larry i think, long-term rates will start to move higher. that's going to be very difficult to deal with. but that's not where our problem lies. the problem lies in a more deeper problem, that is essentially a consequence of our response to the crisis that emerged. >> let's dig a little deeper into this. why do you think over the past six years the recovery has been so muted? what's your view on it? >> i think some of the things that larry mentioned, i would

use them in a different sense, but basically we are dealing with a situation in which you can see what's going on if you try to construct the g.d.p. in terms of the average maturity of what goes into the g.d.p. for example, software is three to five years, residential . ilding is 75 hair cuts are is one month. what you end up with is a weighted duration average which basically, if i had a chart, i should have brought my charts, it's been. going down gradually and then goes sharply lower. the major component that decline in average -- if average durability is the fact that there's been a very dramatic decline in structures as a

percent of g.d.p. in fact this includes residential and nonresidential. they went from over 10% of g.d.p. down to slightly below 6%. that four percentage points is a very big number and is translateable in one form or another where the sluggishness and unemployment rate is coming from and the overall slack that say c.b.o. is employing. so that to me is where the problem lies. it's not evident that the remainder of the economy -- it's not doing great, but it's not doing all that -- it's not behaving particularly unusual manner. so as far as i can see the issue that we have it and uch a dramatic decline long lived assets and not

particularly in shorter lived assets. here i think we have to split the structures into residential and business. and then examine each separately. ve got a fairly long regression, long meaning long in ime, which measures the extent to which nonfinancial corporate liquid cash its flow into till liquid long-term fixed assets. >> basically putting your money where your mouth is. >> yeah. they haven't been speaking very much. what the data show is very interesting. at the bottom, which is not that far from where we are now, the

actual ratio of capital investment -- fixed liquid capital investment is at the lowest point in peacetime since 1938. and we are up only slightly improved from that particular level. >> you said on nume -- you sat on numerous boards. why is that? >> it's not so much the boards that you see. although you do see it. also when i was an active member of this organization as a business economist, i was a consultant to a lot of corporations and sat through the issue of how investment is actually made. what will happen is a product manager will be asked to present an exhibit as to why a certain facility of petrochemical

feedstock, what can be constructed. and they will trump out the usual data which a lot of the membership here will basically be quite familiar with, and they get after tax rate return of 0%, which is terrific. what's the variance? and there's where the big decisions are made. is xperience over the years that it's very much more important to get a narrow variance, which is usually the case in basically cost saving equipment, than it is to have a market expensive, very high rate of return but with a significant potential for loss. my experiences more often than not that stuff is pushed aside. so what we are looking at is what is it that causes the variance of capital expectations

to spread? and here it is really the issue of what these wonderful, useless term, uncertainty. uncertainty is a vague notion we have to put numbers on it to get anything useful. relationship with the share of cash flow going to capital investment and nonfinancial corporations, and i try to explain it in the usual regression manner. and using the dependent variable being capital investment, nonfinancial corporate capital investment as a share of cash flow as the deep ended variable and then cyclically adjusting all the independent variables to

move the multicommonality, which you can do and give you the characteristic of multii am regression, of the individual regressions evan bayh itself sums up to exactly what the multiple regression is. you can essentially see where the particular elements within the regression are affecting the fitted -- >> look over the results? >> yeah. the r back to 1970 square is a little over .75, but it's a trendless series, so you don't have the biases where you always have these wonderful high r squares when you got two population and the number works n a tree, go up.

what the data show fascinatingly is that in a sense you do get an impact from the biggest -- the biggest impact when the slack in the economy increases. that's probably half the decline or have of the measure as to why corporate investment to cash flow moves. but the rest of it is not. and the rest of it is a big part , is the cyclically adjusted net gross government savings ratio or very close to the same. -- the savings figure is gross savings figure shows that large government deficits not only crowd out private

investment in the longer run, but i see it doing it contemporaneously. and the reason essentially is in a x-post savings domestic economy, savings minus investment must equal your account balance. what we are seeing here is that if you basically cause an increase in government deficit, it is out of necessity sub tracting savings from the rest of the economy. i was about to say that to me is what's causing the gross domestic savings rate to be declining very significantly to the point where now the net domestic savings figure is zero. and if the net -- gross domestic

savings is close to zero, which it is, in order to get capital investment, domestic capital investment, you have to add to the domestic savings figure the gure on net borrowing from abroad. what's happening now is basically we have had a dramatic decline in gross domestic by ngs and partially offset a decline in -- i should say, decline in the borrowing from abroad. and the result of this is that the capital investment going into the capital stock has declined very appreciably, and that going through the usual multifact of productivity shows why productivity has slowed down so dramatically and why the

g.d.p. is stagnant. and my basic view is that unless and until we get capital investment going up, meaning somehow changing some of these components, because the most important one right now is a very different one. it's the spread between the 30-year treasury and the five-year note, and that basically is at the highest level in american history, meaning that we are not only discounting the future, but we are discounting the far distant future at a far more aggressive rate. >> quote your book on this, we could talk about remedies. this is interesting, it struck me -- our highest priority going forward is to fix our broken political system. short of that there is no viable long-term solution to our badly warped economy. how do we go about -- what would your recommendations be? several s you have

elements of it. you have the regulation side -- >> you're asking me how we fix -- >> i'm asking, how do we start? >> let me start off by saying of the way c view the things -- the way the system is structured is that you get a a -- i don't know how to put this. the regulatory structure -- perhaps defined as dodd-frank, is not working and it can't work. it can't work because it doesn't address what the problem is. there isn't a single issue which occurred in the break down in finance. remember, in 2008, this was not a breakdown in the nonfinancial

system. the nonfinancial system, in fact, was in good shape, as i can basically recall it. and the result of that system is that all of the problems were financial. and all of the financial problems were of two sides. two forms. one a failure to fully address whichsue of the extent to restrained entially because fraud is a very dangerous thing for a market economy. trust is a fundamental issue in the way our system works. i don't think we have applied them exactly. the remainder is largely the act that we had inadequate

levels of capital in the financial intermediary system, and collateral requirements for various different types of debt. which tells me that if we didn't have all of that type of running we wouldn't be into serial defaults of the type we saw which broke the whole system down, virtually overnight. and serial defaults cannot occur nless you have debt. so my solution to this which i think probably will ultimately be a major factor i hope, and a fundamental solution, because what they got now isn't working, is to have requirements that not only capital goes up, but more importantly that there be mandatory requirements to hold so-called cocoa bonds. cocoa bonds are contingent

convertible bonds which are very much like deben tures, but if you put in it certain precrisis triggers as to when and under what objectively measurable conditions it, that debt turns into equity. obviously the floatation of those issues cost another 200 or 300 basis points. that is the ultimate is government is going to be ailing us out. as far as can i see, if we do that then we eliminate the serial defaults in the financial system, which means you don't have the tremendous declines in market value of equity, but as

occurred after the dot-com boom, nothing. the chamings in g.d.p. were barely visible and appeared immediately following the crash of the dot-com boom, which really caused a huge losses in in households and pension funds and other means in which there is no basically having leverage, but you saw large amounts of loss. that's what i have seen is basically a required to do as they are trying to do. avoid this from happening again. i have heard that phrase so many times it's tiring because it always does happen again unless we do something. >> as you said, fixing basically this reducing the uncertainty, how do you see it progressing?

do you -- a year from now, two years from now are we still going to be talking about sub p% growth in the u.s. or -- 3% growth in the u.s. or will some be resolved? >> until the political system gets restructured in a form in which we have rational budget policies and rational fiscal policies generally, i don't see how we are going to solve this problem, because the basic problem i think is the fact that we have no domestic savings going on. household savings are down quite significantly. business savings is not. undistributed earnings of corporations as larry points out actually are doing fairly well. ut the major losses, the

households, which used to be 10%, it's now a small fraction of that. rogressing towards zero. and the structure of the budget is way out of kilter. c.b.o. has got a forecast for the deficit going down next year probably that's likely. but then it goes straight back up. and they are using what i would consider a fairly optimistic income probably. so what we've got here is a very tricky problem on policy. because as was mentioned, which is relevant here, the sum of financing insurance as a percent of g.d.p. in the united states, 947, rose .4% in 1 virtually every single year to reach 8% in 2007.

now, that is not -- i should say hat is not something basically american. chinese data show exactly the same thing. most of the major international economies show that phenomenon, which is essentially saying, no, it is not the issue of bangers trading with each other because these are consolidated numbers. to be sure that 8% went down to i think 7.5% during the height of the crisis, but it's now right back where it is. that is raising the interesting question, is this secular rise something fundamental to this system? i don't know the answer to that question. but, if it is, then dodd frank is actually going to be

significantly counterproductive and squeezing down and creating, despite the fact that what they are trying to do, they are creating institutions which are too big to fail, which means that those institutions which would, were they allowed -- took the support out from under them by government, you would end up with them going into chapter 11. now, there's nong wrong -- nothing wrong in going in chapter 11. it's an extraordinarily successful program which restructures debt, but if it's too big to fail, it becomes a ue fillity and everyone expects the government to step in, which -- utilityity, and everyone expects the government to step in, which means they get their savings at ry low interest rates, and it's a terrible misuse of the domestic savings of the society, because unless you have created destruction, unless you have

liquidation of the obsolescent equipment, you are never going to make it. >> are there similarities there between japan? i i would think so because recall the crash of 1989, what ecame apparent to me is that they weren't -- the japanese banking system was not calling loans. they kept turning over. as larry pointed out a zero interest rate, which they had back there, is not terribly difficult to do. but the problem, essentially, is that japan does nottle, i remember very prominent politician in japan told me, said i went through my analysis why you have to have creative

destruction to get productivity rising and standards of living rising. you have to allow institutions to go bankrupt. nd he says to me, he says, you analyze the situation extraordinarily well. that is not lem is the japanese way. forcing people to lose face is an extraordinarily unethical thing to do in business. and to have a dodging loan on your books, to think it's easy to get off, the united states, off it was a crisis, just basically wrote them off and people went into bankruptcy and they came back out. but they don't do it that way in japan. i think one of the problems they had in in stagnation, they have not allowed the system 20 liquidate. >> should china be looking at

japan? >> they are, but not in the way like it to be. >> what are your thoughts on what's occurring in china right now? >> i think just look at the basic data on the shadow banking system. straight up. lending is very difficult. it was very disturbing the other day was that i believe there was a coal company which went bankrupt, and everyone was waiting to see what would happen, because the presumption was that with nearly $4 trillion in reserves the people's bank of china were not about to allow any institution to go bankrupt. and consequently it was like the g.s.e.'s in the united states, it's a very inefficient system because capital is not moved to

a more productive cutting-edge technology. the result basically is that they came in, they bailed them t, and precisely the wrong signal that could be made at the very difficult's to get cutting-edge technologies to have a significant advantage over less productive and types of investments. which means that the tremendous growth rate and productivity in china, which has been essentially the result of borrowing from the developed world, mainly by bringing in capital investment with the trouble is the that a couple years ago a study

100done one was who are the most technologically innovative companies? 40 were american. zero were chinese. which means effectively if thompson reuters is right, almost all the 9% productivity annual growth rates in china are from borrowed technologies. now, as the chinese wage rate is moved significantly higher, and closing the gap against the developed world wage rates, the productivity will fall very sharply. and it already is. u can -- we are looking at a double-digit annual growth rate. it's now approaching 6,

depending how you measure it. and remember that the chinese figures are not the same as we look at them. they can create whatever g.d.p. they want by just acquiescing in the requirement of a province to filled three office buildings because they need to put people to work. it wasn't -- they needed the jobs. and that is financed by a state-owned bank under instructions coming, essentially, from the state counsel. the result is that you get the g.d.p. that's created there, but it may be a see through building or it may be as is morel vant to the problem, icks sells steel capacity -- excess steel capacity, which is built to create jobs. >> it sounds like animal spirits is a phrase you used in your

book, you said basically the impact of a bubble bursting, a lot is due to leverage s there a bubble in china in your opinion? do you think -- there is. but there is a big difference in china. it's very comforting when you have in your pocket $3.8 trillion to do with it as you want to solve your problems. so i'm not at the moment saying at china is about to go bust unless the stuff they are holding, which the u.s. treasury, goes bust, and i hope that is not -- >> i see. what about -- let's bring it back to the u.s. for a moment. income inequality. it's been rising substantially over the past you couple decades. what's your view on that? any policy recommendses, etc.? >> as you point out in the book, you can make a pretty high

regression r squared if you exam -- examine the issue of various measures of income and equality with two independent variables. one is average hourly earnings or even average earnings for not only hourly but supervisory employees as well. stock presence. that fairly well fits the rise that is going on first the decline then the rise in equality. and the issue is, do we want to prevent -- to we want to knock stock prices down to get equality better? i consider income inequality the most dangerous part of what's going on in the united states.

larry had a very interesting chart which shows it's going back to where it was in the 20's and thirds -- 30's, which is probably accurate. it a couple of professors put those data together i thought quite effectively. so that you can see the deteriorating impact of that on a current political system. and you cannot talk about politics without talking about the impact on the economy. so my basic view is to recognize that what is causing this slow rate of growth in average hourly earnings has basically slowed productivity growth. and slow productivity is going to be compaused stock is not rising sufficiently properly

because capital investment is not going anywhere. and that therefore we cannot expect to keep borrowing savings from abroad to finance our gross domestic capital investment, we can't do that. and i would just say that we can't -- we basically have got to get to the position where we get our economy moving at a 4% annual rate and in so doing if we succeed in doing that, that will solve the issue very quickly. but that does not look as though it's immediately on the horizon, and i just might say parenthetically i didn't mention the fact that household uncertainty is best measured by the price of homes. or the years 2001 to 2004, there were a million additional

single family owner occupied homes which essentially met the whole household formation was going into owner occupied single family dwellings. and that was because the price levels were rising and everybody felt very positive about the distant future. homes last a long time. as soon as the prices began to turn, the whole thing caved. the actual level of stock of single family owner occupied homes has been going down or -- not very significantly, but gradually. to the share of ownership total households, which came down very dramatically after the crash, has not recovered. despite the fact that home rices -- prices have come back. >> lack of confidence,

uncertainty again. >> it's another way of saying that if you are a homeowner, if you are basically say a person about to form a household, do you want to take a long-term commitment or a short-term commitment? and it's disproportionately going to rent where you have a very short-term commitment rather than buy a home which is a long-term commitment. it looks exactly like the business community's reaction in a different context. >> in terms of these indicators you're looking at, an an employee of bloomberg, on your terminal what other indicators are you looking at or what other imbalances do you see monitoring around the world? >> you mean my bloomberg terminal? >> on your terminal, yeah. what's your launch pad look like? >> when i turn it -- i collect

certain types of data which i watch every day. it's exchange rates, mainly. at the moment i'm always looking it at's going on with the year's long-term debt in the euroarea. .

and greece is solving its -- greece is solving its government deficit problem, but they're doing it in the large part by the so-called primary

surplus. they're getting to the point where they're long -- where no longer it's going to be a net cash flow into greece. they're going to have to start o pay out interest, that's the danger point politically in greece. i don't know how -- it's touch and go on this election there. if greece goes to the extreme and drops out of the euro, which is not a small probability, i'm not sure what happens. >> interesting. >> and is there any other country that you -- red flag for you right now in the year oy zone? >> no. actually -- portugal is doing better. spain is doing better. really after being in serious trouble. >> yeah. >> don't know how italy will be doing with the new were.

i like where he comes from, but i'm not sure what his policies are going to be like. >> one more question. i'll bring it back to the u.s. i read your book this weekend and you said immigration is one of the most important but least talked about policies. that the u.s. should be discussing right now. what do you mean by that? >> well, let me just go back to income inequality for a second. we could cure a significant part of that by taking our h-1-b programs and either eliminating them, which isn't going to happen, or basically open up the issue of allowing people who for god sakes gets the green in the united states and then we force them to go home. we have, as all of the measures n education indicates, a

unbelievably deteriorating k-8 -- grade 8. we can't manage to -- we cannot manage to staff our very complex, highly sophisticated capital structure with what's coming out of our high schools. we used to be able to do that. we had high-class, best in the world, actually. we have deteriorated very significantly. it's getting worse all the time. if we're not going to educate our kids, bring in other people who want to come -- want to become americans. let them in here and let them use their skills, which is what uld happen if h-1-b were eliminated, and that also has a very significant impact on the

sychology of income inequality because-h 17b-b -- because h-1-b subsidizes everyone's income in the room, including you and me. if we would open up, we would find ourselves competing with others at our skill level and our income levels would not necessarily go down very much, but i bet you they'd go down enough to make an impact because income inequality is a relative concept. people who are absolutely at than say the scale 1925 would be getting food stamps today. it's a relative issue, so you don't have to necessarily bring up the bottom if you bring the

top down. and so that immigration has got a many pronged, especially -- there are really two different types of immigration problems we have. one is, what do we do with the 11 million illegals, which is a very tricky problem. maybe half of them are in the work force. if you ever required them to leave the country, our economy will fall apart because you have no idea, you know, how much structure they build into it. so i think we're making a mistake in the immigration area which i think in many respects could be the easiest thing we could do to solve it. >> well, i was hoping to get a segment in on jazz, but we're out of time. so we'll have to leave it at that. thank you, all, very much. i hope you enjoyed it. thank you, dr. greenspan.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] >> the u.s. house convenes in about 55 minutes at 2:00 p.m. eastern. they'll take up several bills including one requiring the i.r.s. to respond to any written question from a taxpayer within 30 days. also, legislation to allow people to unlock their cell phones. meaning they can use the phone with a different wireless network. they're back at 2:00 p.m. eastern. we expect legislative work to get under way at 3:00 and we'll

have it all live here on c-span. also today, house speaker john boehner will head to the white house to meet with president obama. it's the first one-on-one meeting between the two since 2012. back then they were looking for a way to allowed the so-called fiscal cliff. the president and speaker didn't come to an agreement. this was initiated by the white house and will include a broad range of topics. >> the new c-span.org website makes it easier than ever for you to keep tabs on washington, d.c., and share your finds via facebook, twitter and other social networks. easy search functions let you access our daily coverage of events, new tools make it simple to create short video clips and share them with your friends vowa facebook, twitter and other social networks or you can send links to your video clips via email. just find the share tools on our video player or look for the green icon links throughout

our site. watch washington on the new c-span.org, and if you see something of interest, clip it nd share it with your friends. >> last fall, arkansas became the first state to win federal approval to use medicaid dollars to purchase private insurance for thousands of low-income residents. arkansas governor mike beebe was in washington this week for the national governors association meeting. while he was in town, he spoke at the kaiser family foundation about his state's medicaid expansion. >> i speak for all of us, i believe, in thanking governor mike beebe for being our featured guest today. since taking office in 2007, governor beebe has focused on improving arkansas' educational system, expanding its economy and with his wife, ginger,

championing the elimination of childhood hunger. in the context of today's breakfast, governor beebe has had the first in the nation private option plan to win federal approval as an alternative to expanding the traditional medicaid program. while the governor's plan in arkansas has its skeptics among republicans, not all republicans in arkansas, it is serving as a model that other states are considering. only yesterday, tennessee's republican governor, bill haslem, was scheduled to meet with the health and human services secretary sebelius in an effort to hammer out flexible arrangements similar to that of arkansas. with states assuming new roles by virtue of the affordable care act and the supreme

court's decision making -- excuse me -- declaring it constitutional, the united states is entering a new era of federalism with states assuming a larger place in shaping public policy. governor beebe does not have an opening statement, but he will entertain our questions. now i will turn it over to our moderator this morning, mary agnes carey -- excuse me -- mary agnes carey of the kaiser health news who will pose the first question. mary agnes, please. >> thank you. thanks so much for that introduction. i will open it up. i know everybody here is eager to ask questions. i want to talk about the week you had and the week you're going to have. the senate did approve continued funding for the private option, but the house did not. on four different votes, you were just a handful short. sometimes it was three. sometimes it was five votes. you have another vote set for tuesday.

what's your strategy? how are you trying to get those votes and what happens if you don't? >> well, i think everybody needs to understand first of all the hurdle that has to be overcome in sheer numbers. 75%. that's really the story. i mean, the "washington post," "new york times," public broadcasting service, all sorts of different folks, a.p., have inquired about all of this and in many instances they say, how come is there so much opposition? there's not so much opposition. 75% vote is required. 75%'s already been obtained in the senate. 27-8. that's not much opposition. in the house we think the vote, as it stands today, is 73, 25 with two undecided. if you get those two you get 75. so i think people need to

understand because of peculiar quirk in the constitution, appropriation bills, which is really what this is, this is just the authority to spend the money. the approval of the program required 51%. if we were talking about 51% we wouldn't even be talking. so if it doesn't pass, there's a very small minority of people who will have stopped it. what's the strategy? the strategy is telling the truth. what we did last time was we determined through various means that by utilizing the private option, which was the ability to take private -- to take public medicaid money and buy private insurance with it for exactly the same population, requiring the exactly same minimum requirementes that medicaid expansion would have required, that we were able to save roughlyexcuse me -- $86 million, $87 million, $89

million general if we had not accepted medicaid expansion in the form of the public option. the legislature decided to give that money back to the taxpayers, so they passed and i supported tax decreases comparable to the amount of savings generated by the private option. they're not going to repeal the tax decreases. i mean, politically that's not going to happen. so the ramifications of not continuing the private option would be that you'd have an $86 million hole in the budget. what's the strategy? tell them the truth. what's going to happen to the budget? in arkansas k-12 is sacrosanct so you're not going to touch k-12 funding. that's roughly 50% of the general revenue budget which means 100% of those cuts to make up that $89 million will come from just 50% of the budget. ramifications are significant. i'm sure there will be -- if

there's 135 legislators there may be 135 different approaches to how you would make up through cuts in the budget that loss of that $86 million, $88 million in revenue. and once they -- once they look at that, it seems to me the choices are going to be very difficult. we just keep telling them the advantages. there's no difference this year in terms of any negative reason why they would vote against it. in fact, there's more positive reasons this year than there were last year. got the questions answered. last year when we passed it, we were still unsure as to whether the federal government was going to grant the waivers, the specific waivers. a lot of what was done was contingent on the federal government to granting that. that's happened. the uncertainty that existed at the time it was originally approved by 75%, all those questions have been answered positively. and as i indicated, we've

passed tax savings onto the voters subsequent to that, so that's another reason. and now you've got 100,000 or more people that are on health insurance that didn't have it before, that would now be taken off of health insurance. so all of the objective factors, it seems to me, that would indicate that a positive vote or continuation would be awarded are there and then some over and above it was last time. so the good news is that the speaker is willing to keep voting. you know, at some point i guess you have to figure out if you're not going to get that last one vote or two votes you have to figure out, ok, let's throw out another budget. let's start talking about budget cuts in areas. we've got some other significant budgetary problems. and my proposed budget addresses those, but it goes

away, the proposed budget goes away. that's where we are. >> all right. well, let's open it up to the audience. reporters, i'd like you to please state your name once you get the microphone, your outlet and your question for the governor. who would like to ask a question? >> got one right here. >> right here in front. all right. >> phil. nice to see you again. how much do you think if this doesn't go through does it continue in arkansas, how much do you think this will affect other states that are looking at this? do you think it will sort of put the brakes on it in other states that are considering this? >> it depends on whether or not -- it seems to me it depends whether or not they analyze why it wouldn't go forward. if it doesn't go forward it won't be because of overwhelming majority of the republicans and democrats don't think it should go forward. as i've already indicated. the senate we've got 23 republicans, 12 democrats, and

yet they voted 27-8 in favor of this. that's total bipartisan support. in the house we got 51 republicans, 49 democrats, actually technically 48 democrats and a green party but the green party caucuses with the democrats so i count it as 51-48. it's 73 to whatever, depending where those two end up. so, again, it's the majority of -- it's bipartisan overwhelming majority. if other states recognize if it doesn't go forward, it's because a small minority stopped it. i don't think it will have a negative affect on what other states want to do. the substance of what's going on is going to be appealing. it's not going to be changed whether this passes or whether it doesn't pass. and probably there are very few states and very few governors and very few legislatures that are facing this kind of enormous hurdle.

you know, i joke all the time 75% is hard to get from motherhood and apple pie, much less something that can be controversial. so i think other states are pursuing it and following. you know, there are a lot of things happening in other states that are -- how should i put this? that are interesting. one of the -- one of the cornerstones by which what the federal government did to help pay for this and incidentally one of our arguments is we'll pay for it whether we take it or not. everybody's going to pay for it whether you take it or not. one aspect of how you pay for the federal health care and the proposed medicaid expansion as well as other aspects of the health care act is that medicare reimbursements to hospitals have been reduced. those reductions in medicare reimbursements to hospitals are going to occur with or without

medicaid expansion. and so what happens is those hospitals take the hit without any corresponding offset, and even with the offset, in most instances, they're still actually proposed to lose more money with the offset of the medicare expansion offsetting the care. we had a couple colleagues on the other side having an epiphany, i suppose, about the potential harm to their ospitals in their states and decried, i guess, the mifications of the federal health care act on reimbursement as though -- everybody's know this, i suppose. should have known this for some period of time. i've been talking about it over a year in arkansas. and so their solution apparently in a couple

instances is not to take the medicare expansion but give more state tax dollars to those hospitals. seems to me like the taxpayers are then paying twice. it's one of our -- there are a lot of arguments that we utilized. we utilized the potential penalties on small businesses that would be reduced significantly depending upon what the business was, how many employees qualified, etc. in arkansas it was about a $38 million estimate for small businesses that would be otherwise have a penalty imposed that would be relieved. now, that was an estimate and it could vary. it's hard to put a precise number on it. but it's a significant number. certainly the effect on hospitals just on our medical teaching hospital alone, it was $28 million a year difference to take medicaid expansion versus not to take medicaid expansion. so -- i mean, that was an argument. i used the oversimplified analogy of the federal gas tax

all the time that we're paying 18.5 cents a gallon, something in that area, for a federal gas tax that everybody in the country pays. your states get federal highway money back. some are donor states. some are donee states. we all get some money back from the federal government, and it would be like paying your federal gas tax and telling the federal government, don't send us any of our money backs. our taxpayers want to help pay for the roads in california because our roads are fine. we don't need any help. all of those arguments and then think obviate it's arithmetic as clinton called it. it's arithmetic, it's not even math. and as a result of that, different folks for different reasons -- of course you have the basic reason, you have people with health care coverage that never had health care coverage before. i also point out -- i was a --

chair of a hospital board for about 10 years when i had a real life and making real income and we saw what uncompensated care does for the rest of us. it's cost shifting. hospitals can't stay open they continue to give 12%, 15%, 25% of their goods and services away free, not be compensated for it, so you shift costs onto the rest of us so those of us who are carrying health insurance or paying health insurance premiums or paying for these medical bills end up paying more to offset the losses and then the taxpayers end up doing that to some extent in some states as part of our savings because we were able to reduce the tax dollars we were sending to various providers for uncompensated care, we didn't have to do that anymore, or at least not as much because they would now be paid through the medicaid expansion. all those reasons and then some , probably more than we got time to talk about. >> phil brought up other states

which is interesting, but i'm wondering if you have any tips for governors negotiating waivers with h.h.s.? how difficult was it for to you do it? what advice would you give other governors? >> this one thing all the governors are united on. it shouldn't be hard to negotiate a waiver with the federal government. it's already been afforded somebody else. they shouldn't treat anybody any differently, any worse. if you're asking for more or something significantly different, then you should go through the process. when the executive committee met with the president last month, which many of you may have even covered, one of the things we talked about was the fact that waivers need to be streamlined, particularly where they are waivers that are virtually identical to the waivers afforded to somebody else. instead of starting from scratch, if arkansas has a waiver that covers a, b, c, and utah wants a waiver comparable

to a, b, c, don't start over, streamline it and i think they're receptive to that. i think other states will -- i think the attitude of this administration -- i know kathleen sebelius has been very easy to work with on this issue. i think what they will do is try to accommodate unless it just totally violates the basic principles of what the statute calls for in terms of who's covered and under what circumstances. >> all right. next question. katie -- did i see julie? >> there's all kinds of hands up back there. >> julie from n.p.r. i know that medicaid expansion wasn't technically on the agenda this weekend for the governors, but is this something that came up privately, informally? >> and that's where it did come up. it did come up privately. the n.g.a. is notorious trying to stay away from controversy. you're sitting there and you have republican governs, you have democratic governors. there are so many issues upon which we can agree.

it's usually anti-congress stuff. [laughter] so there's enough business to do without getting into things that you have such a huge division on. but privately i was approached -- and don't ask me the names because i already told a couple reporters that asked this, i'm happy for you to ask them. if you can figure out who they are and i'll confirm if they confirm. but if they come to me talking privately about what we did and what they're thinking about doing, then i'll honor that sidebar. >> but can you just share with us generally the kinds of things governors -- >> how did do you it, what are the advantages? will are a couple of substantive advantages that immediately pop out. first of all, the churning issue that occurs with those folks that are close to the upper limits on the poverty level.

create a problem back and forth between what do you get off of medicaid or onto subsidized insurance, so that issue is significantly resolved with the way we did it because they're doing the private insurance anyway, ok. so that's one issue. secondly -- and this is a big thing for some governors -- we have an insurance premium tax in our state. some states do. some states don't. but one of the big concerns by everybody is, well, we can't afford when the feds start making us pay a share of it. it maxes out at 10% in 2020, we can't afford it. so that's an argument against it. well, what we have is an insurance premium tax so without raising any taxes at all, we now have an influx -- by the way, we did it by buying private insurance of new revenue that can be set aside that will help offset the states' share of the obligation going forward. that's certainly appealing to

some of those folks. particularly if they already have some form of tax in that regard so they don't have to, quote, raise taxes. then you got the added benefit of increasing competition because you -- what we saw is we had more insurance companies with a greater pool of folks that potentially would be involved, we had more insurance companies come into the state for competition than we had before. it's not just cosmetic. it's truly -- there's truly a substantive difference between what we did. but the basics are the same in terms of the population that gets covered, how they get covered, what they get covered by or for and what those income guidelines are. but that's the kind of questions that i get from other governors. and virtually everyone -- i don't know that has a 3/4 hurdle yet. i think they ought to give me a

medal. >> maybe they will. who knows. right in front. sorry. beg your pardon. i'll get back to you in a minute, john. >> just a quick arkansas-focused question. the speaker said he's 100% certain he'll get the private option passed again, but you don't seem to be as optimistic or willing to say -- >> oh, i'm -- >> confident it will get done. is there a reason you're not as hopeful? >> no, no. it's just my style. to be a little more guarded. you know, it's -- speaker carter's got a good handle on his body. he's a good man, and he's a good judge of what's going on. it's just more my style to be a little bit more guarded about what i say about stuff like that. for a lot of reasons. first of all, i don't want to antagonize anybody over there, ok. i don't want anyone to think i'm taking them for granted. i served over 20 years in the senate. i know how governors can

irstate legislatures. as governor i know how legislatures can irritate a governor. but those individual legislators have all sorts of different things going through their mind. oftentimes less said by the executive branch on a controversial issue where some of them are still making up their mind or at least they haven't declared themselves yet the better. and so part of that strategy and tactic is not try to throw any gasoline on the fire. so don't take my receipt sans to count and beat my chest about predicting as anything other than me trying to just powder. >> ricardo alonzo zaldavar from a.p. governor, this is connected to e rest of your budget, and what happens if you can't resolve this impasse? what happens to the rest of

your budget? in virginia they're talking about a possible government shutdown over medicaid. is that something that would happen in your state also? >> i certainly would hope not. it depends on -- there's no telling what kind of hardball somebody could play. you know, i think that kind of hardball inevitably backfires on everybody. and so i would hope we wouldn't do that. i got democratic colleagues in the house that are ready -- or at least they talk like they like that approach. i think last year the republicans in congress figured out they didn't want to do that anymore. i think the voting public -- the voting public would be very irritated at everybody. it would be hard to figure out who they're going to blame for a shutdown. i think the more realistic possibility is severe and draconian budget cuts in some

essential services is likely to be the result if it didn't pass. but by its very nature, i think that potential harsh remedy may be one of the reasons why speaker carter and perhaps others have more optimism about it passing, including me. once you see how you get -- who you hurt and how you hurt them, because you have to balance that budget, then sometimes that could have an affect on somebody's vote. particularly if you just need one vote or two. >> all right. in the back. >> hey, governor. i'm sarah walker from the "arkansas democrat." >> i heard of you. >> i wonder if you think there's anything could you have done differently last year to convince the minority now who's not in support of private option again and maybe what suggestions you would have for other governors? >> no, i don't think there's anything we could have done

different. as i indicated a minute ago, sarah, i think to the contrary. i think all the objections before have been positively answered. you got to look at what's going on here. you got -- you've had a couple votes switched, right? couple of those folks are running for other offices, including congressional offices, where this is an issue. where the anti-obamacare attitude is an issue in a primary. and some of their announced opponents are opposed to the private option. that don't have anything to do with understanding what the private option is. i mean, these aren't people that have been involved in the debate. they're just running for congress that have never been in the legislature. i'm talking about the others. and so they come out against the private option really without understanding what the private option is. they're just against obamacare. it's caused some people to change their vote. i would argue that that's because of a political race. i mean, i don't have any other

reason for that. es that just enough to tilt the spectrum. everything that was promised it happened. the waiver was obtained. everything that was outlined as to what it would be ended up being that way. and then you got some people that are against it that were always against it and they are just philosophically opposed to additional taxpayer subsidized government programs, period, period. so some of those folks philosophically that were against it before are still against it. you're never going to change it. look at it this way. we had 77 votes in the house before. by our last count we got 73 now. so i mean, you had four people change for whatever reason if

the count's correct, and those reasons could be political. they could be -- i don't know. i know at least a couple -- i know one in the senate was fairly political that changed, but then the other one flipped so it offset it. >> ok. question over here. right here in the middle. ok. go ahead. sorry. who had their hand up here? >> i think he's -- there you go. >> robert. >> governor, has the state legislature -- >> please identify yourself. >> robert, "new york times." has the state legislature passed legislation a state-based insurance exchange? and do you think arkansas will have a state-based exchange by 2016? >> well, that's a great question. yeah, they're headed now in the direction of the state-based exchange. i tried to get them to do that to begin with when all that stuff first came out and they didn't want to do it.

the legislature did not want to do it. i guess i could tell this story, matt. >> sure you can. sure. >> after all, this just between us, right? >> you got it. >> last year we were riding over to the white house on monday morning, as we'll do here in a minute, as we always o to have a couple hour really intense session with the president, whoever the sat down s, which i on a mini bus. the republican governor of idaho was with me. we came in together eight years ago. nice fellow. philosophically there are some differences. former member of congress. what are y'all doing on the exchange? are you doing the state exchange? we did the federal exchange but the hybrid partnership kind of thing. i tried -- oh, you can't do that, he said. you have to do a state

exchange. boim just wants -- he wants everybody to do a federal exchange. that's how they're going to take it all over. i said, you need to come to arkansas and tell them what i've been telling them about wanting to do a state exchange. so the irony of this is the very republican anti-washington health care contingent, when all this came out, that didn't want a state exchange now has come to the conclusion that they want to reverse their position and do a state exchange. so yeah, we're headed in that direction, to answer your question. >> ok. "roll call", ."/" when do you think you'll get votes? >> they'll vote wednesday and then again thursday. >> every time you have a vote, doesn't that open the door for a law maketory say, to keep my vote, you need to do x?

>> well, you've about run out of x's. you can't -- you just can't go -- first of all, it's not fair to the 73 or 71 or 68 or 52 that have always been there. it's not fair to start making deals with somebody at the 11th hour unless it's something that benefits the entire state that's not specific to a specific legislator because if you start that stuff, then the folks that have always been with you that didn't ask for anything was trying to do what they thought was good public policy will -- you'll lose some of that support. that's a fine line to walk. you can't start trading stuff away. besides, don't have nothing to trade. >> all right. in the back right there. >> thank you. jeff from bloomberg radio. governor, what are the insurance companies stand to lose if you lose? what are they doing to help you? how about other companies in the state, like wal-mart, tyson, which have low-wage

workers that qualify? what are they doing to help you? can i ask one other shing? medicare advantage cost the government more money than straightout medicare. how did your insurers manage to cost you less money than straightout medicaid? >> well, let me go back and take the first part of that question. the private sector is doing a lot and depends on who in the private sector ox is getting gord the most. all the hospitals are -- and the board members and the private sector that support hospitals and the local chambers of commerce and the folks that acknowledge and recognize the ramifications of not continuing this for their individual hospitals, particularly some rural hospitals are working very hard. the chamber of congress statewide is working very hard. they get the arithmetic too.

what we're seeing is what i call the traditional republican usiness community is aligned with the democratic -- with the democrats. how do y'all like that? and that's how you got dwourts. and so traditional republican business interests are totally supportive of continuation of the private option. now, when you talk about medicare advantage, you're talking about something else i'm not even messing with so i have to ask somebody about that. i can tell you that part of what we did with regard to the waiver was to keep the costs pursuant to the insurance rates for medicaid expansion. in our case, the private option, had to be within the parameters of what was anticipated by expenditures by the federal government. and that's where we are. we've been able to do that and we've been able to do that to some extent with some

additional competition. >> this side of the room. we want to be fair to everybody. sorry. go ahead. >> carl from the "philadelphia inquirer." in pennsylvania we have a governor that's trying to out-beebe you. trying to do a -- require work search. he's trying to do changes to all the existing medicaid recipients. >> we haven't done all that. >> pardon me? >> we haven't done all that in the private option. we haven't required the work stuff, and we haven't changed the existing medicaid requirements. >> right. and so what do you think the prospects for success are in pennsylvania? >> you're a better judge of that than i. i love philadelphia. finn you closed lebec which was my favorite restaurant in all of north america. >> we can send you takeout. >> you know, i can't answer

that question. i think corbett has, as a lot of other governors have, looked at the pure math. there are people that will pay for this whether they take it or not. their taxpayers, their hospitals are going to pay for this whether they take it or not. they are not going to impact the federal deficit or change what's going on with our national debt whether they take it or not. and they -- a lot of them have awakened to that. i hate to be repetitive and give clinton too much credit, but it is arithmetic. really, people. and the logic of it permeates most of these people. there's -- i'm not calling out names so you'll have to judge who it doesn't permeate yet, but i mean, i don't know -- look. most of our people in the legislature do not want and do not like obamacare, as they

call it. this is not an endorsement of obamacare in arkansas. if you took a vote in arkansas, it would be 68%, 70% of the folks would be opposed to the federal health care act. and if you took a vote in the legislature as to how they'd vote up or down as to whether this continues nationally they'd vote against it. they've separated the fact they can't control in little rock or you're not going to control in harrisburg what they do in congress. it is a -- if you don't like it, go to congress, vote. run for congress, win. in the meantime, you have an obligation to your people in your own state to do what's best for the people in your state with the cards that are dealt you. and so these cards have been dealt the entire country, and the entire country is dealing with it in different ways, but bhoast of these governors now have -- most of these governors now have recognized there are

major advantages to their state and to their people to take it if they're paying for it anyway. and so that's what the fight is right now. how do you get there? and a lot of them are constrained by the pure politics of their own situation, and you know, my argument is -- i mean, we're all supposed to do what our people want. we're representatives, ok. i get all that. but the governor has the responsibility to lead, too, and to educate, too, and sometimes it seems to me -- it's easy for me to say. i am not running for anything else. ok. i'd like to think i've been this way my whole life. part of my responsibility and part of anybody's responsibility is to help educate your own people about what you believe is appropriate good public policy. i think a lot of them are now starting to do that and trying to do that, including a lot of republican governors. a lot of republican governors who -- did anybody see jan

brewer pointing her finger in obama's chest a number of months ago, huh? anybody think she's a big fan of the president? or what's going on? she took it. and then she said if they don't keep it wrecks her budget. it's arithmetic. >> so you think it's just a matter of time before the governors that haven't accepted the medicaid expansion do so? >> no. there's some i don't think will ever do it. i'm not going to go there. but i think more and more are trying to find a way to do it. you all have reported on some of it. you've asked questions about specific names on some of it. i certainly have been asked by many of them about ways to do it so, yeah, i think it's incremental there will be more and more. i know that's what y'all want to talk about. let me throw something else out that's related to all of this. maybe a bigger deal than what

you're talking about in the long run. if y'all are health care reporters and maybe something i have bean asked about by members -- by other governors as much or more than medicaid expansion/private option, in our case, and that's payment reform. we are actually leading the country in a methodical, logical and reasonable way to reform the way we pay for health care in this country and i think that's going to be ultimately the huge story efore it's all said and done and we got to get away from fee for service and we are doing that. i don't make public policy in arkansas in a back room with a bunch of staff members. i think you involve the actual front line people that have to implement whatever that policy is as you're formulating the policy, not after you've done it and say here it is. we had the medical community, the hospital community, other

providers, the insurance community, patient advocates and all sorts of folks from the beginning over a couple year timeline and incrementally and slowly shift away with various episodes of care away from the old fee for service model into something that -- and this is hard to do -- it's a balance. how do you reward quality, how do you ensure quality and efficiency, cut costs? almost you would think that would be mutually exclusive. it's not. let me give you one quick anecdotal story that i keep telling about this over and over because i love it. one of the first episodes -- and the way this works, and i got the surge general here and i got our medicaid director here if you have real questions i can't answer is you've got a baseline of say what it's normally going to cost for a certain procedure. there's got to be a safety net for unforeseen consequences,

etc. one of them was pregnancy and labor and a normal delivery. here's the baseline. when we were establishing all this stuff, we had a fine ob-gyn in the little rock area who raised cane. can't do that. all of my deliveries are way over this line. i lose money on every delivery. can't do that. well, unbeknownst to him and with a little bit of self-examination all all this was occurring, in every pregnancy, in every delivery his office was sending every placenta to the pathologist whether it was called for or not, whether there was any reason to be doing that or not. and so i mean, the pathologist is making money on it. he didn't know that. the office was doing it as a matter of routine. when they stopped that and decided only to send placentas to be sent for pathological examination, his baseline dropped below -- he's going to make more money. and what's going to happen, the

taxpayers, the insurance companies, everybody in general are going to be paying less. so, i mean, that's where this country's got to go. and everything we talk about, we have bernanke there yesterday for governors-only thing and people kept talking about g.d.p. and where the country's going and what the economy is going to be like and consistently health care costs, both public and private health care costs continue to be the unknown factor, including with the entitlement programs, that posed the greatest threat to the stability of the economy going forward. and if everybody is going to talk about our health care costs being unpredictably bad and if everybody's going to talk about the fact we don't have any better outcomes than a lot of other western industrialized nations that are doing it differently, then we better do something different. and we started it in arkansas and more and more folks are

starting to do it. i'm sorry that wasn't what y'all wanted to talk about but you need that in your radar because that's the next big story. and ultimately maybe the bigger story overall. >> ok. i saw two hands up here. >> see, i wasn't making it -- >> start back here. >> jeffrey with "mississippi public broadcasting." >> oh, boy. >> you've addressed a lot of the questions i was hoping you would. i'm curious, i heard democrats in my state make the sail arguments you made and have basically fallen on deaf ear. if you think the branding of it of the arkansas plan versus being obamacare will make it any easier to bring republicans to the table? >> somebody asked me that question the other day. did you do this just because you changed the name of it? it's more than that. what we did was substantive as well. i give a lot of our republicans credit. what i call traditional business republicans. because they helped formulate

this and they deserve a lot of credit. this was truly a bipartisan approach. yeah, it had a different name and did that have an affect on some folks? you bet. but it's more than that. it was honest to goodness substantive differences that lent themselves to private sector support and it certainly provided a pathway for folks in our state. even with the 75% requirement. if i were -- if i were talking strategy, yeah, i would talk about that in mississippi or alabama or south carolina. i think that there are principles that we utilize that would be appealing to some folks on the other side of the aisle and i think democrats embraced it pretty wholeheartedly. t least our democrats did.

so if you're asking me if an approach like this would help in your state? i think it would. i think the starting point, you got to get a bell cow, whether it's a legislative leader or governor or whatever that has to embrace it first and then start trying to sell it. that answer your question? >> mostly. >> what else you want? >> mean, the democrats in my state pitched your plan and it failed, it didn't go anywhere. i mean, it seems to me it's not quite the answer that people in my state are looking for. >> well, you're probably right. [laughter] >> all right. right here. >> 20 seconds. >> sorry. ok. whoever has the mic, go ahead. >> hi, governor. martha, i work for public radio in boston. thanks for your time. >> how are you? >> doing great. >> mad at the red sox. they beat my tigers. >> you know, you'll have next year. >> ok. >> you'll come back. , meaning tion is, who

government or the private sector, makes sure that savings, if there are any, in payment reform, come back to me, the consumer? >> that's a really, really good question. theoretically, competition will generate some degree of those savings if indeed health care costs are going down then theoretically insurance -- health insurance company a is going to have to lower some degree of rates to be competitive with health insurance company b. what we also have is the ability to take the data and present the data, in our case, to the insurance commissioner and transparency let the world know what the data is actually showing. i frankly don't think this is going to cause a lot of reductions in what we're

spending. i think what it's going to do is stop the growth, which is just about as important. the upward spiral of health care costs, outpacing inflation , is an outpacing growth in general has been the huge problem in terms of eating into our g.d.p. so i wouldn't be overly optimistic that all of a sudden when we do all this and implement all these ep -- episodes that we're going to see significant reductions. i hope we see some. we've seen it with regard to health care costs. our medicaid projections are much better than they were a year and a half, two years ago. so are everybody else's, for that matter. so we've seen some stagnation in that inflationary spiral. but do y'all have any thoughts on any specific ways that the savings are going to actually

show up and be realized in somebody's pocket in terms of their health care costs? >> let's get you a microphone. > got to give him the mic. he's the surge general of arkansas. he doesn't know squat about insurance. >> joe thompson, surge general for the governor. i think two parts. one is increased competition. our marketplace has not been very competitive, so with payment improvement combined with expanded coverage, we will hopefully have increased competition. the second is the savings actually are equally dis percented between the pay ors so they will transmit those savings back to the customer, whether it's a business, paying for insurance or an individual buying insurance. >> and i don't mind you being skeptical about this. i think it's worth watching very, very closely to ensure

that it works, but i can tell you what we're doing is not working. where you reward through payment, every test, that's not conclusive to efficiency. and it doesn't necessarily help for quality of care. and you know with the technology we've got now, if somebody does an m.r.i. in hospital x in a rural area, they can immediately transmit now and the doctor in hospital y in a metropolitan area can in real time have that information and doesn't have to do another m.r.i. seven hours, 10 hours, 12 hours later unless it's called for because of some particular thing that's going on with that patient that's different. and so in the past you get paid for the extra m.r.i. whether you needed it or not. now you're not going to. not unless there's justified reason for it.

that's across the board for tests and everything else. it rewards and puts almost in a patient-centered medical home the burden and the responsibility and the coordinated care effort on the part of the primary care physician. puts that primary care physician in control. we got so much in the way of health care costs. i don't mean to get off into this but it's different but you asked a good question. a lot of this stuff is manageable to keep health care costs down. a lot of these conditions, whether it's diabetes or high blood pressure or whatever it may be, properly managed with a proper primary care physician making sure people do what they're supposed to do and check on -- have a reward for being able to follow up on it can prevent a lot of higher health care costs down the road in a more expensive setting. >> i think we had a question right back here. >> hi. diane weber with "kaiser health news." i want to go back to something you said about small business. you said you have something for 38 million savings

the private option. is that because people who are working for small businesses would be eligible for that private option so the small business wouldn't have to -- >> yes. that's the estimate. and again, part of that's been delayed. they keep delaying the implementation of the penalties. but that is an estimate that was done based upon those folks that fit those categories. and we got a lot of small businesses, convenient stores and folks that might in the aggregate, because of the way it's imposed in the number of stores, be over a 50-employee threshold or be in a threshold that they would otherwise have to pay a penalty but they're not paying the kind of wages that would allow them to have subsidized health care and they'll fall within that 138% of poverty level and that's an estimate of what penalties would be -- would not have to

algomation of that business. is 38 right? nobody knows for sure. that's as good estimation that our folks could come up with. this is private sector estimates. i don't remember whose publication it was. it might have been "politico," but i saw recently an estimate $300 million ke to $400 million hit on texas small businesses. did anybody see that? >> and you can see all of this event online at c-span.org as well as coverage from the national governors association meeting this weekend. the u.s. house is gaveling in momentarily. a bit later this afternoon, they'll take up seven bills, one of which would require the i.r.s. to tell taxpayers shares their tax information with another federal agency. another bill would prevent the i.r.s. asking someone's

religious or political beliefs. also this afternoon, reports that the president has met with house speaker john boehner. the speaker's office saying the president and the speaker had a constructive conversation in the oval office for about an hour today. we'll take you live now to the house floor here on creerp. -- here on c-span. the speaker: the house will be in order. the prayer will be offered by our chaplain, fathenr